Consumer welfare fund under GST

Detailed note on consumer welfare fund.

Meaning of consumer welfare fund:-

Consumer Welfare Fund was created to promote and protect the welfare of consumer, create consumer awareness and strengthen consumer movement in the country, particularly in rural areas. Amount of refund which is not payable to the applicant is credited to the Consumer Welfare Fund. The amount of refund is paid to the applicant in case where there is no unjust enrichment; i.e. the incidence of tax has not been passed by the supplier to the recipient as also in the circumstances where the principle of unjust enrichment is not applicable. Otherwise, the said amount is credited to the Consumer Welfare Fund.

Amount to be credited to Consumer Welfare Fund

Section 57 of the CGST Act stipulates that the Government shall constitute a Fund, to be called the Consumer Welfare Fund and there shall be credited to the Fund:

Amount of refund determined by an order passed under section 54(5), any income from investment of the amount credited to the Fund; and such other monies received by it,

Refund is normally credited to the Consumer Welfare Fund constituted by the Government except under following cases, where it shall be paid to the applicant:

• Refund of tax paid on zero-rated supplies of goods or senders or both or on inputs or input services used in making such zero-rated supplies;
• Refund of unutilized input tax credit under subsection 54(3);
• Refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;
• Refund of tax in pursuance of section 77;
• The tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or
• The tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify

Utilization of consumer welfare fund:-

• All sums credited to the Consumer Welfare Fund shall be utilized by the Government for the welfare of the consumers in such manner as may be prescribed
• The Government shall, by an order, constitute a Standing Committee who shall make recommendations for proper utilization of the money credited to the Consumer Welfare Fund for welfare of the consumers.
• The Central Consumer Protection Council and the Bureau of Indian Standards shall recommend to the GST Council, the broad guidelines for considering the projects or proposals for the purpose of incurring expenditure from the Consumer Welfare Fund.
• The Government or the authority specified by is required to maintain proper and separate account and other relevant records in relation to the Fund and prepare an annual statement of accounts in such form as may be prescribed in consultation with the Comptroller and Auditor-General of India.

Person who may apply for grant from Consumer Welfare Fund

• Any agency or organization engaged in consumer welfare activities for a period of 3 years registered under the provisions of the Companies Act, 2013 or under any other law for the time being in force, including village or mandal or samiti level cooperatives of consumers especially
• Women, Scheduled Castes and Scheduled Tribes, or any industry as defined in the Industrial Disputes Act, 1947 recommended by the Bureau of Indian Standards to be engaged for a period of five years in viable and useful research activity which has made significant contribution in formulation of standard mark of the products of mass consumption.
• The Central Government or the State Government may make an application for a grant from the Consumer Welfare Fund

However, a consumer may make application for reimbursement of legal expenses incurred by him as a complainant in a consumer dispute, after its final adjudication

Formation of standing committee

• The Government shall constitute a Standing Committee with a Chairman, a Vice-Chairman, a Member Secretary and such other members as it may deem fit.
• The Committee shall make recommendations for proper utilization of the money credited to the Consumer Welfare Fund for welfare of the consumers
• The Committee shall meet as and when necessary, but not less than once in three months.
• Any agency or organization engaged in consumer welfare activities for a period of three years registered under the Companies Act, 2013

Powers of the standing committee

The Committee shall have powers -

• To require any applicant to produce before it, or before a duly authorized Officer of the Government such books, accounts, documents, instruments, or commodities in custody and control of the applicant, as may be necessary for proper evaluation of the application.
• To require any applicant to allow entry and inspection of any premises, from which activities claimed to be for the welfare of consumers.
• To get the accounts of the applicants audited, for ensuring proper utilization of the grant;
• To require any applicant, in case of any default, or suppression of material information on his part, to refund in lump-sum, the sanctioned grant to the Committee, and to be subject to prosecution under the Act.
• To recover any sum due from any applicant in accordance with the provisions of the Act.
• To require any applicant, or class of applicants to submit a periodical report, indicating proper utilization of the grant.
• To reject an application placed before it on account of factual inconsistency, or inaccuracy in material particulars.
• To recommend minimum financial assistance, by way of grant to an applicant, having regard to his financial status, and importance and utility of nature of activity under pursuit, after ensuring that the financial assistance provided shall not be misutilised;
• To identify beneficial and safe sectors, where investments out of Consumer Welfare Fund may be made and make recommendations, accordingly.
• To relax the conditions required for the period of engagement in consumer welfare activities of an applicant;
• To make guidelines for the management, administration and audit of the Consumer Welfare Fund.

The Central Consumer Protection Council and the Bureau of Indian Standards shall recommend to the GST Council, the broad guidelines for considering the projects or proposals for the purpose of incurring expenditure from the Consumer Welfare Fund.

The author is practicing company secretary provides various compliance services related to all types of companies and can also be reached at vinayak.charu@gmail.com.